US Dollar: What Every Trader Needs to Know

What is the US Dollar?

The US Dollar (USD) is the official currency of the United States. It was established after Congress passed the Mint Act on April 2, 1792. During the Civil War, the government issued paper money in the form of “demand notes”, that later became known as “greenbacks” due to their color. Traders and analysts now often use “greenback” as an unofficial term for the U.S. Dollar.

The Creation of the Federal Reserve

In 1791, the U.S. chartered the First Bank of the United States the forerunner to the modern U.S. central banking system. However, when the time came for its renewal in 1811, the legislation did not pass due to overwhelming opposition in Congress. In 1816, the Second Bank of the United States was chartered and scheduled for renewal in 1836, only to be denied by President Andrew Jackson.

From 1837-1863, the so-called “free banking era” was characterized by numerous bank failures and elevated economic volatility. A myriad of state banks overextended credit due to the lax regulation around reserve requirements that resulted in waves of bank blowups and economic depressions. Each bank issued its own currency,

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